Danske Bank A/S's Dividend Analysis
Assessing the Sustainability of Danske Bank A/S's Upcoming Dividend
Danske Bank A/S (DNKEY) recently announced a dividend of $0.55 per share, payable on 2024-04-02, with the ex-dividend date set for 2024-03-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Danske Bank A/S's dividend performance and assess its sustainability.
What Does Danske Bank A/S Do?
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Founded in 1871, Danske Bank's headquarters are in Copenhagen, Denmark. It is the largest Danish bank with a dominant market share of 24% in lending and 27% in deposits. It operates through 144 branches in Denmark, Finland, Sweden, Norway, and Northern Ireland.
A Glimpse at Danske Bank A/S's Dividend History
Danske Bank A/S has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Danske Bank A/S's Dividend Yield and Growth
As of today, Danske Bank A/S currently has a 12-month trailing dividend yield of 3.39% and a 12-month forward dividend yield of 6.97%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Danske Bank A/S's dividend yield and five-year growth rate, the 5-year yield on cost of Danske Bank A/S stock as of today is approximately 3.39%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Danske Bank A/S's dividend payout ratio is 0.27. Danske Bank A/S's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Danske Bank A/S's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Danske Bank A/S's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Danske Bank A/S's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Danske Bank A/S's revenue has increased by approximately 6.50% per year on average, a rate that underperforms approximately 50.43% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Danske Bank A/S's earnings increased by approximately 63.30% per year on average, a rate that underperforms approximately 5.64% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 1.60%, which underperforms approximately 73.09% of global competitors.
Next Steps
In conclusion, while Danske Bank A/S's dividend yield is attractive, investors should consider the payout ratio, profitability, and growth metrics when evaluating the sustainability of future dividend payments. The bank's consistent dividend history and moderate profitability provide some assurance, but the growth metrics indicate there may be challenges ahead that could impact dividend stability. It is important for value investors to weigh these factors and monitor the company's financial health and market position closely. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
